sebi:MO/33/ISD/12/03

SEBI · SEBI · 2003-09-08 · A K BATRA, WHOLE TIME MEMBER

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Suspension of certificate of registration for a period of 6 months

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 199
• Reg. 4
• Reg. 13(2)
• Reg. 13
• Reg. 4(a)
• Reg. 5

Parties

• M/s Sanjeev Phumbhra

Holding

The certificate of registration of M/s Sanjeev Phumbhra was suspended for 6 months for indulging in off-market deals in violation of SEBI Circular dated 14.09.1999 and for receiving/paying funds to fellow brokers without corresponding securities transactions.

Full text

2 member violated SEBI Circular SMDRP/POLICY/CIR-32/99 dated 14th September, 1999 which was notified by CSE to its members vide its notice dated 16th September 1999. Further, it was alleged that such transactions are irregular and are prohibited under Regulation 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to securities market) Regulations, 1995 and are also in violation of Clause A(1) (4)&(5) of the Code of Conduct as specified in Schedule II read with Regulation 7 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 and Rule 4(b) of SEBI (Stock Brokers and Sub Brokers) Rules 1992. b) That the member made payments/received funds from other members of CSE, without corresponding transactions in securities. It was therefore alleged that the member carried out business other than that of securities, which is prohibited under Rule 8(1)(f) of SC(R) Rules, 1957.

3 5. I have carefully examined the facts and circumstances of the case. I have also carefully considered the Enquiry Report. On appreciating the facts and circumstances of the case the findings are as under: 5.1 I find that the member indulged in off market deals with member Sanjay Khemani of CSE as under: Name of the Broker: SANJAY KHEMANI Name of the scrip: Satyam Computers. Date of transaction Member’s Buy/Sell Quantity Amount (As per difference bill) (IN RUPEES) Amount in Rs.(as per difference bill) 8/1/2001 TO 9/1/2001 SELL 200001 79394708.91 8/1/2001 Buy 200001 74030830.07 5363878.84 11/1/2001 SELL 200000 772933431.75 08/01/2001 BUY 200000 72914500.00 4378931.75 23/01/2001 SELL 128657 54241434.47 23/01/2001 BUY 128657 528322219.18 1409215.29 Name of the scrip: Zee Tele Date of transaction Member’s Buy/Sell Quantity Amount (As per difference bill) (IN RUPEES) Amount in Rs.(as per difference bill) 23/01/2001 SELL 200127 57787631.64 19/01/2001 BUY 200127 47152335.60 10635296.04 02/01/2001 SELL 199270 53676138.41 01/01/2001 BUY 199270 51508680.00 3070426.24 Name of the scrip: Silvind Date of Member’s Quantity Amount (As per Amount in Rs.(as per

4 transaction Buy/Sell difference bill) (IN RUPEES) difference bill) 30/01/2001 SELL 121587 30324507.38 29/01/2001 BUY 121587 26859505.54 3465001.84 Name of the scrip: ACC Date of transaction Member’s Buy/Sell Quantity Amount (As per difference bill) (IN RUPEES) Amount in Rs.(as per difference bill) 02/01/2001 SELL 222118 36558800.49 01/01/2001 BUY 222118 35655832.66 902967.83 5.2 I find that the member admitted the above instances. SEBI vide Circular dated 14.09.1999 banned all negotiated deals, cross deals etc. which include Off- the-floor transactions also. In the said circular it had been notified that all negotiated deals shall be permitted only if the said deals are executed on the screens of the Exchange i.e. the price and order matching mechanism of the Exchange like any other normal trade. It was explained in the said circular that the above decision was taken as negotiated deals avoid transparency requirement, do not contribute to price discovery and investors do not have benefit of the best possible price and militate against the basic concept of the stock exchanges which are meant to bring together a large number of buyers and sellers in an open manner. 5.3 In view of the above, the member should not have executed off the floor transactions otherwise than through the trading mechanism of the exchange. This is in violation of SEBI Circular SMDRP/ Policy/CIR-32/99 dated 14/09/1999. In fact, CSE notified the SEBI circular 14.09.99 on the off market trades to its memb

Source: SecMarx — sebi:MO/33/ISD/12/03. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.